Deacons (A Firm) v. White & Case Ltd Liability Partnership and Others
Read the full judgment text of FAMV 22/2003, FAMV 23/2003 on BabelCite. This Court of Final Appeal judgment was delivered on 6 August 2003 before Bokhary PJ, Chan PJ, Ribeiro PJ.
Civil procedure – leave to appeal – Court of Final Appeal – section 22(1)(b) Hong Kong Court of Final Appeal Ordinance – application for leave to appeal from Court of Appeal decision refusing extension of time and dismissing appeal against earlier interlocutory orders made by Deputy Judge Poon – underlying action arising from failed merger negotiations and alleged breach of confidentiality and non-solicitation agreements – five lawyers including capital partner and salaried partner resigned from plaintiff firm and joined defendant firms – final injunctions sought against 3rd and 4th defendants – judicial bias – deputy judge disclosed long-standing university friendship with plaintiff's partner Mr David Zee – recusal after learning Mr Zee was a capital partner – test for apparent bias – whether Court of Appeal applied correct test – reasonable apprehension of bias test developed in In re Medicaments and Related Classes of Goods (No 2) and endorsed by House of Lords in Porter v Magill – whether correct test in Hong Kong – R v Gough – Locabail – Webb v The Queen – Bradford v McLeod – Strasbourg jurisprudence – Piersack v Belgium – De Cubber v Belgium – Pullar v United Kingdom – Hauschildt v Denmark – Auckland Casino – treatment of contested facts concerning judge's knowledge – whether the court below applied a Gough-style test or the fair-minded and informed observer test – whether question of great general or public importance arises – whether question academic between parties – applicants' refusal to argue underlying merits of struck-out paragraphs and refused discovery – injunctive relief of limited duration that would be rendered nugatory by further adjournment – Millar v Dickson distinguished as a test case – Phoenix Piling – exercise of Appeal Committee's discretion – academic questions not entertained – prejudice to plaintiff – application for leave to appeal dismissed – costs order nisi in favour of plaintiff against the 3rd and 4th defendants.
Legal issues: Whether leave to appeal should be granted on the question of the test for apparent bias
Outcome: Application for leave to appeal to the Court of Final Appeal dismissed.
Cited by 47 cases · Cites 4 cases
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FAMV Nos. 22 and 23 of 2003 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NOS. 22 AND 23 OF 2003 (CIVIL) (ON APPLICATION FOR LEAVE TO APPEAL FROM _______________________
_______________________ Appeal Committee: Mr Justice Bokhary PJ, Mr Justice Chan PJ and Mr Justice Ribeiro PJ Date of Hearing: 1 August 2003 Date of Determination: 1 August 2003 Reasons given: 6 August 2003 ________________________________ REASONS FOR DETERMINATION _________________________________ Mr Justice Ribeiro PJ: 1.On 1st August 2003, we dismissed the application of the 3rd and 4th defendants for leave to appeal to the Court of Final Appeal, with reasons to be given later. We now hand down our reasons. The action 2.The action which underlies the present application arose out of unsuccessful merger negotiations involving the plaintiff and the first two defendants. The plaintiff and the 2nd defendant are both firms of solicitors in Hong Kong. The latter is associated with the 1st defendant, an international law firm based in New York. 3.Some time after the negotiations had terminated, five lawyers resigned from the plaintiff firm and agreed to join the first two defendants. They included the 3rd defendant, who was, at the time of giving notice of his resignation, a partner described as a "capital partner", with the plaintiff. They also included the 4th defendant, who was, when he resigned, an employee, described as a "salaried partner" of the plaintiff. 4.On 24 June 2002, the plaintiff started proceedings against the defendants. It claims that it had entered into certain agreements with the defendant firms whereby the parties undertook mutual duties of confidentiality in respect of materials disclosed in the course of the merger negotiations and also undertook not to solicit lawyers from each other's firms during the discussions and for a period of 12 months after discussions had terminated if no merger ensued. The plaintiff contends that the defendant firms, by recruiting the 3rd and 4th defendants, and that those defendants, by joining the defendant firms, were each in breach of the agreements and of certain alleged equitable obligations and/or had induced or participated in such breaches by other defendants. 5.Among the reliefs sought against the 3rd and 4th defendants in the Amended Statement of Claim is a final injunction restraining them from "entering into partnership and/or employment with or being engaged in any other capacity by" the first two defendants "until in the case of the 4th defendant, the end of September 2003 and in the case of the 3rd defendant, 1 January 2004" or "for such period as the Court shall deem just". Damages, including exemplary damages, and an account of profits and equitable compensation are also sought. 6.The 3rd and 4th defendants deny the plaintiff's allegations and reject its entitlement to the relief claimed on various grounds. One section of the Defence filed by them was headed "Background to the 3rd and 4th defendants' decisions to resign" set out in paragraphs 9 to 16. In that section, they listed complaints as to how the plaintiff firm was operated and contended that certain named partners in the plaintiff firm, among them a Mr David Zee, were, for a variety of reasons, in breach of their duties as partners. Those are matters which were said to have motivated and led to their decision to resign. Deputy Judge Poon's orders in March and April 7.In October last year, directions were given for a speedy trial and for the trial to be split between liability and quantum. In January this year, Deputy Judge Poon was designated as the trial judge and became generally seised of the proceedings. 8.The plaintiff applied to the deputy judge for an order to exclude discovery in respect of paragraphs 9 to 16 of the Defence on the grounds that they were irrelevant to any cause of action being asserted in the claim. That application was granted on 13 March 2003 (HCA2433/2002, 13.3.03) and, pursuant to a consequential application by the plaintiff, the deputy judge ordered those paragraphs to be struck out on 1 April 2003. Another order made on 13 March 2003 by the deputy judge related to an application for specific discovery made by the 3rd and 4th defendants. After the plaintiff had consented to discovery in relation to certain items sought, with the exception of a single item, the residue of the application was dismissed by the deputy judge on the grounds of irrelevance to matters arising in the action. In this Determination, these applications and orders are referred to as "the earlier applications" and "the earlier orders" respectively. Recusal of Deputy Judge Poon 9.On 2 June 2003, at the start of the trial and before dealing with certain outstanding interlocutory applications, Deputy Judge Poon decided to inform the parties "perhaps out of an abundance of caution" that he and Mr David Zee, described by the deputy judge as "a salaried partner" of the plaintiff, had been close friends when at university together and for some time thereafter, but that they had only very infrequently been in contact since the deputy judge joined the Bench in 1993. The court then adjourned to allow the outstanding interlocutory applications to be got in order. 10.When it resumed sitting on 5th June 2003, all the defendants invited Deputy Judge Poon to recuse himself, pointing out that Mr Zee was, contrary to the deputy judge's belief, in fact a "capital partner" with the plaintiff, having assumed that status in January 1998. Mr Zee was therefore effectively a party with a personal interest in the outcome of the proceedings. After reviewing the recent authorities and applying a "reasonable apprehension of bias" test to his circumstances, the deputy judge acceded to the application and recused himself by a ruling dated 9th June 2003 (HCA2433/2002, 9.6.03). 11.Deputy Judge Gill was designated trial judge in place of Deputy Judge Poon and commenced dealing with the outstanding interlocutory applications on 19 June 2003. However, the applicants decided to challenge the earlier orders made by Deputy Judge Poon with a view to arguing that, having recused himself from the trial, he ought equally not to have dealt with the earlier interlocutory applications so that those orders should be set aside. Application before Ma JA 12.As two of the earlier orders, namely, those resulting from the plaintiff's applications to limit discovery and to strike out paragraphs 9-16 had been perfected, the deputy judge was functus officio, and, being out of time for appealing, the applicants had to seek an extension of time for appealing from the Court of Appeal. This they did by taking out a summons before Ma JA, sitting as a single judge of the Court of Appeal, on 17th June 2003. No extension of time was needed in relation to the third of the earlier orders. 13.On 20th June the application for an extension of time came before Ma JA (HCMP2591/2003, 20.6.03). He dismissed it on two grounds. First, he held that there had been unacceptable delay in bringing the application. Although the delay was relatively slight, it was held to be unacceptable given that there had been an order for a speedy trial and given the recusal of Deputy Judge Poon and the impending trial before Deputy Judge Gill. Secondly, the extension of time was refused on the ground that the appeal would be pointless or academic in nature, since no grounds had been advanced for believing that if it were to be successful, leading to the earlier applications being re-argued before Deputy Judge Gill, there was any prospect of obtaining orders in any way different from the earlier orders made by Deputy Judge Poon. In the Court of Appeal 14.The applicants sought to challenge Ma JA's decision before the Court of Appeal by a summons issued on 20th June 2003 seeking to reverse Ma JA's decision. That application was heard at the same time as the appeal, brought within time, against the third of the earlier orders, namely, that concerning the specific discovery which had been refused by Deputy Judge Poon. Rogers VP (with whom Le Pichon JA agreed) dismissed both the application for time and the substantive appeal (HCMP 2591/2003 and CACV 178/2003, 11.7.03, Reasons 15.7.03). 15.After having considered certain authorities and the arguments advanced by Mr Edward Chan SC, then appearing for the applicants, his Lordship concluded that an attack upon the earlier orders could not "be challenged on the basis that there was a reasonable apprehension of bias". He also upheld Ma JA's exercise of discretion in refusing a time extension on the grounds of delay and, having apparently been addressed by Mr Chan SC on the underlying merits of the earlier applications, upheld Deputy Judge Poon's view that the relief sought was irrelevant. The application before the Appeal Committee 16.The application for leave to appeal is brought under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance which is in the following terms :-
17.In the Notice of Motion and the applicants' skeleton argument, questions variously formulated were advanced as having the requisite importance and as being deserving of reference to the Court of Final Appeal for decision. At their core, and at the forefront of the submissions advanced by Mr Michael Bunting SC, appearing with Mr Ashley Burns for the applicants, was the proposition that the correct test for determining whether a judge's decision should be regarded as vitiated by apparent bias had been rendered doubtful by the manner in which the Court of Appeal had disposed of the appeal below. It was submitted that the Court of Appeal had applied a test whereby the court ascertains for itself whether the judicial conduct under review gives rise to a real risk of bias, without any consideration being given as to how that question might be answered by a fair-minded and informed observer. In so doing, the applicants argued, the Court of Appeal had propounded a test which differs materially from the test now generally accepted in other relevant jurisdictions. Whether the correct test in Hong Kong is that advanced by the Court of Appeal or that adopted in such other jurisdictions was submitted to be a question of great general or public importance which ought to be decided by the Court of Final Appeal. The test for apparent bias 18.In 1993, the law on this topic was as set out by the House of Lords in R v Gough [1993] AC 646. Lord Goff (at p 670) thought it "unnecessary, in formulating the appropriate test, to require that the court should look at the matter through the eyes of a reasonable man, because the court in cases such as these personifies the reasonable man." Instead, the proper approach was for the reviewing court,
19.As Lord Hope was subsequently to point out in Porter v Magill [2002] 2 WLR 37 at §100, the Gough approach was at odds with the approaches adopted in Australia, Scotland and in the jurisprudence of the Strasbourg Court :-
20.However, recent English authority has resulted in a convergence between the English test and the test in other relevant jurisdictions. Such convergence was considered necessary in consequence of the Human Rights Act 1998, as the Court of Appeal explained in In re Medicaments and Related Classes of Goods (No 2) (CA) [2001] 1 WLR 700 at §85, (although the court also pointed out (at §§64-66) that steps in the direction of convergence had already been taken in Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 at 477-8). Having considered the "reasonable apprehension of bias" test developed in Strasbourg, Lord Phillips MR (giving the judgment of the Court) formulated the test applicable in England and Wales as follows (at §85) :-
21.This shift away from the Gough test was endorsed by the House of Lords in Porter v Magill (above), which slightly amended its formulation to drop reference to "a real danger" (per Lord Hope at §103). This marked an acceptance in England and Wales, as in the other jurisdictions mentioned, that the view of the fair-minded and informed observer as to whether a reasonable apprehension of bias arises may differ from the reviewing court's own view, and that it is through the prism of such an observer's perception that the court should consider whether the case is one of apparent bias. 22.A refinement relevant to the present application was also considered in the recent authorities. As is generally accepted, the reviewing court must ascertain the facts relevant to the challenge. After those facts are found, the reasonable apprehension test is applied to those facts. However, a difficulty sometimes arises as to whether one or more of the relevant facts should be taken as established. Since it is generally accepted that it is insufficient simply to accept in all cases the tribunal's declaration regarding the fact in question at face value (eg, as to whether it knew of an allegedly disqualifying connection) and also that the tribunal should not be subjected to cross-examination, how is the court to deal with a fact that may be highly relevant, but which is controversial? In the present case, this is said to be relevant to Deputy Judge Poon's declaration that when he made the earlier orders, he had been unaware of Mr Zee's status as a "capital" partner, the acceptability of that assertion having been put in issue by the applicants. 23.The importance of the judge's knowledge of a key fact to the existence of any apparent bias was acknowledged in Locabail (UK) Ltd v Bayfield Properties Ltd (above, at 477) :-
24.In the Medicaments case, the proper approach, applying the reasonable apprehension of bias test to such contested questions of fact, especially questions relating to the state of the judge's knowledge, was explained as follows (at §86) :-
The test applied by the Court of Appeal in the present case 25.It is argued for the applicants that if the correct test had been applied, notwithstanding what may well have been an honest oversight on the part of the deputy judge, the fact that the pleadings made it patent that Mr Zee was an equity partner, ought inevitably to have caused the Court of Appeal to hold that a fair-minded and informed observer would have had genuine difficulty accepting the deputy judge's statement that he was unaware of Mr Zee's status as partner. Accordingly, it was suggested, the Court of Appeal should have taken the deputy judge to have known that fact and to have held that this inevitably gave rise to a reasonable apprehension of bias. 26.The applicants contend that Rogers VP (at §§16-19) applied instead a test which eschews the views of the fair-minded and informed observer in favour of the court's own views. In other words, he propounded a test similar to the Gough test and different from the converged "reasonable apprehension of bias" tests mentioned above, giving rise to a question of great general or public importance as to what the correct test in Hong Kong is. 27.In our view, it is not arguable that Rogers VP sought to propound or is capable of being taken as propounding any competing test. In the Ruling leading to his recusal, Deputy Judge Poon undoubtedly applied the "reasonable apprehension of bias" test based on Medicaments and Porter v Magill. In paragraph 7, he stated :-
28.Moreover, in the same paragraph, the deputy judge cited the recent decision of Rogers VP in Phoon Lee Piling Co Ltd v The Hong Kong Housing Authority, 20 May 2003, CA, unreported; where, at §20, Rogers VP stated :-
29.When, some three weeks or so later, Rogers VP handed down the Court of Appeal's Reasons for Judgment in the present case, he had plainly not changed his view as to the applicable test. At §16, he referred to §§7-9 in the deputy judge's Ruling, commenting : "It seems to me that the deputy judge in paragraph 7 to 9 of his ruling of 9 June 2003 set out the judicial approach to the matter correctly", following this immediately with a reference to a point made in Medicaments. He was therefore clearly adopting as correct the reasonable apprehension of bias test approved in Medicaments and Porter v Magill. 30.It is unnecessary for us to comment definitively on the applicable test. It suffices for present purposes to note that both the applicants and the respondent agree that the test in Hong Kong is the reasonable apprehension of bias test developed as aforesaid and that the Court of Appeal was of a like mind. There is accordingly no question of great general or public importance dividing the parties or the court below as to what the proper test is. At the highest, it may be arguable that Rogers VP misapplied the proper test, but not that the Court of Appeal had sought to propound a different test or that its judgment casts doubt on the test considered applicable. Whether there was any such misapplication in the present case - and we are not to be taken to be suggesting that there was - is not a question of great general or public importance. The Appeal Committee's discretion and the earlier orders 31.Mr Bunting's stance was that in principle, whenever a decision was shown to have been tainted by a reasonable apprehension of bias, it had to be set aside, it being perfectly irrelevant whether the impugned tribunal had made the correct decision or whether some other tribunal was likely to arrive at exactly the same decision. Accordingly, although invited to do so, he declined to advance any arguments with a view to showing that the paragraphs in the Defence which had been struck out or that the discovery which had been excluded or refused were capable of being resuscitated as relevant to some issue in the action. 32.In our view, Mr Bunting's position on principle may be well-founded if the submission were being made to a court having to determine whether a particular decision below was tainted by a reasonable apprehension of bias. It would not be an answer in that context to say that the orders made should be upheld because they were right, even if tainted. 33.However, that is not the context of the present application. Here, the applicants are seeking permission to raise the question of apparent bias before the final appellate court where an appeal is not as of right. Section 22(1)(b) provides that an appeal shall lie to the Court at its discretion (exercised by this Appeal Committee) :-
34.The Appeal Committee has on many occasions made it plain that leave to appeal will not be granted where the question said to arise, however important it may appear in its formulation, is academic as between the parties. 35.In the present case, we have no reason to believe that if, upon the applicants succeeding on the proposed appeal, the Court of Appeal's decision and Deputy Judge Poon's orders were to be set aside and the discovery and striking out issues re-argued before Deputy Judge Gill or any other judge, the applicants have any prospect of establishing the relevance and viability of that pleading or any entitlement to the discovery in question. Success in the appeal would therefore not have any impact whatsoever on the scope of discovery or on any other procedural or substantive aspect of the action. Unlike the situation in Millar v Dickson [2002] 1 WLR 1615, involving a test case, there would be no wider impact on persons other than the parties. The applicable principles would not be in issue on the proposed appeal and the debate would merely be as to whether they were correctly applied in the present case. Save in highly exceptional circumstances, a question which is wholly lacking in any practical impact would not be regarded by the Appeal Committee as one which "ought to be submitted to the Court for decision". 36.A further discretionary consideration weighs against the grant of leave. As noted above, part of the relief claimed involves final injunctions of limited duration against the 3rd and 4th defendants. All aspects of the injunctive relief claimed, including the duration of any maintainable injunctions, are of course highly controversial as between the parties. However, if leave to appeal is granted, the further adjournment this would entail would render the injunctive relief claimed nugatory in any event, giving rise to possible prejudice to the plaintiff. Given that even victory on appeal would not result in any countervailing benefit to the applicants in any practical terms, the infliction of such possible prejudice on the respondent is hard to justify. 37.For the foregoing reasons, the application for leave to appeal fell to be dismissed. 38.We make the following orders:-
Representation: Mr Michael Bunting SC and Mr Ashley Burns (instructed by Messrs Herbert Smith) for the applicants Mr A. McGregor QC and Mr Anderson Chow (instructed by Messrs Clifford Chance) for the respondent |
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